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Until March 13, energy stocks were a total kick on the short side. Since then, they’ve been clawing their way back, right alongside crude oil. I have no interest in shorting crude, but as we approach the key gap I’ve pointed out below, I’m more and more interested in getting back into the short side of energy stocks.
I’ve already in a few energy positions right now; namely: BP, CLR, CSIQ, DOV, FSLR, GPOR, HFC, IOC, NBL, OKE, SM, and WPZ.
As for my portfolio in general, I amped things up Tuesday. I went from 52 short positions to 75. Let’s see what effect, if any, the Fed Minutes have on Wednesday. The meat of any move may not take place until we get a critical mass of earnings reports over the next few weeks.
The broader stock market has been moving higher in fits and starts. The market’s primary trend continues to point upwards, although there has been a noticeable change in character. Periods of weakness are sharper with a larger number of shares being distributed than before.
It’s a pretty ho-hum day so far; as I’m typing this, the IWM is, as Tom likes to say, “massively unchanged.” Here’s one idea to consider – shorting KB Home, which has been lurching through a series of lower highs and is at what I consider an attractive shorting price now.
ES had a very strong day yesterday and broke back over resistance at the weekly middle band (now at 2063), the 50 hour MA (now at 2069), the 5 DMA (now at 2072), and the daily middle band (now at 2073.5). The stats are bearish for today and we may well see a retest to establish whether the resistance broken yesterday will now act as support. If so then I would be very edgy about any significant break under the 50 hour MA at 2069 and on any break under 2067 I’d be expecting a full reversal candle breaking back below the daily middle band today.
I’ve written a few times in recent weeks about the unusual 5 DMA setup here. I’ve looked back as far as the start of 2007 without finding a single example of a decent break over the 5 DMA, that was reversed within two days, that did not then deliver a lower low before higher highs. As SPX stands here we have had two such breaks in the last four weeks and since then SPX has neither made a low under 2039, nor a higher high over 2119. SPX daily 5DMA chart: